The most comprehensive resource available for payroll professionals. This service provides payroll news, white papers, custom research answers, webinars on the hottest payroll topics, survey and...
By Keith Hill
Adjustments to tax items and pension plan amounts for use in 2018 were released Oct. 19 by the Internal Revenue Service.
The monthly limit for the qualified transportation fringe benefits and for qualified parking is to increase to $260 from $255 in 2018 while other tax benefits are to increase slightly in 2018 because of inflation adjustments, the IRS said in Revenue Procedure 2017-58.
Each year, the agency publishes inflation adjustments for more than 50 tax provisions. The latest adjustments are to be used on 2018 tax returns filed in 2019.
Following are payroll-related provisions that are to change in 2018:
•The personal exemption is to increase to $4,150 from $4,050.
•The standard deduction for married filing jointly is to increase to $13,000 from $12,700 in 2017, to $6,500 from $6,350 for single taxpayers and married individuals filing separately, and to $9,550 from $9,350 for heads of households.
•The foreign earned income exclusion is to increase to $104,100 from $102,100.
•The adoption tax credit is to increase to $13,840 from $13,570.
•The health flexible spending arrangement limitation is to increase to $2,650 from $2,600.
•Penalty amounts for failing to file tax returns and deposit taxes also increase for 2018, the revenue procedure said.
Regarding retirement, the contribution limit for employees who participate in Section 401(k), 403(b), and most 457 plans in 2018 is to increase to $18,500 from $18,000, the IRS said in Notice 2017-64, also released Oct. 19. The catch-up contribution limit remains unchanged at $6,000 while the limit regarding SIMPLE retirement accounts remains unchanged at $12,500, the agency said.
The compensation limit used in defining a highly compensated employee for 2018 remains unchanged at $120,000, the IRS said.
The annual compensation limit for qualified plans is to increase to $275,000 from $270,000, and the compensation limitation for defined contribution plans is to increase to $55,000 from $54,000, the agency said.
The dollar limitation of a key employee in a top-heavy plan remains at $175,000 for 2018.
The compensation limit of a control employee for fringe benefit valuation purposes increases to $110,000 from $105,000.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans, the agency said.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)